Balganga dam project: In a setback to Maharashtra govt, HC upholds Tribunal order to pay Rs 303 cr to firm

A division (two-judge) bench of Chief Justice Alok Aradhe and Justice Makarand S Karnik on August 12 quashed and set aside May 19, 2020 order of the single-judge bench of Justice (now retired) R D Dhanuka that had set aside the arbitral tribunal award and had granted relief to the state government, City and Industrial Development Corporation (CIDCO) and Konkan Irrigation Development Corporation (KIDC).

The HC observed “findings of the Arbitral Tribunal are based on the materials on record and on a proper appreciation of evidence.”

The two-judge bench noted that the majority award had held termination invalid as the firm had taken substantial steps to get forest land clearance. Therefore, there was “no legal basis for the single-judge bench to have upset this finding.”

Justice Karnik for the division bench recorded, “We are satisfied that the view taken by the Arbitral Tribunal on the basis of the evidence on record is a plausible view. In such circumstances there was no scope for the Single Judge to have interfered with the award of the Arbitral Tribunal in the exercise of its jurisdiction under Section 34 of the of the Arbitration and Conciliation Act, 1996.”

In a meeting held in January, 2009 under the chairmanship of the then state Water Resources Development (WRD) Minister, it was decided  to construct a dam on Balganga river, near Niphad village in Pen taluka of Raigad district to meet the drinking water needs of Navi Mumbai’s growing population and industries. The CIDCO was to bear the capital cost for Dam development and would get ownership right over the water and construction was to be executed by the WRD through KIDC.

In May, 2009, the KIDC issued a work order to FA enterprises for nearly Rs. 495 crore and in June, 2011, project cost was revised to Rs. 1, 220 crore, which was disputed by CIDCO, compelling it to form expert committees to ascertain the same.

“Due to continuous pressure from banking institutions,” the FA Enterprises in 2013 approached the HC, after which an arbitral panel comprising representatives of the authorities and the firm was formed. The HC appointed its presiding member.

Meanwhile, the Anti-Corruption Bureau (ACB) in August, 2015 filed a chargesheet against the firm and others for corruption and other irregularities.

The next month, the private firm claimed an amount of Rs 536.56 crore, which the authorities opposed.  In 2016, the KIDC terminated the contract of the private firm.

Three out of five members of the tribunal in April, 2019 passed a majority award directing KIDC to pay to the private firm a sum of Rs 303 crore, prompting the authorities to challenge it before the High Court. The single-judge bench of the HC in May, 2020 set aside the majority award.

Thereafter the aggrieved private firm moved the two-judge bench of HC with appeals against the May, 2020 judgement.  Accepting submissions by senior advocate Aspi Chinoy for the firm, the HC on August 12 held that there was no “patent illegality” in the award and the Tribunal’s decision was a “plausible view,” therefore the same required to be restored.